Digital transformation is a business mandate and not a technology mandate. It involves aligning the technology investments to strengthen your value proposition, grow into an adjacent area of business or even launch more disruptive products and services. New products or services with new platforms, ecosystems and business models can drive value for the stakeholders – be it employees, customers, or a partner. It further helps to react to, and compete in, a dynamic and competitive economy by helping reach new markets, set new benchmarks for products or services, achieve new standards in regulatory compliance and meet the evolving needs of stakeholders.
This is why digital transformation is a key agenda for boards and the C-suite. However, it’s critical to understand what digital transformation is in the first place before discussing its relevance to the C-suite agenda.
So what is it? Is this another passing phrase? A fad? Marketing ploy of the tech world? Is it for me?
Let’s take a deeper look at what digital transformation means and what it entails to embark on such a transformation journey.
Does one distinguish between Digital and Digital Transformation?
The word ‘digital’ for most is an alternative for “information technology”. But is it?
In reality, “digital” means the broad range of platforms, solutions, technologies, devices, machines, software and data, and the application of these in an integrated fashion together with people and processes that enable a more effective or efficient means of achieving an organisation’s goals and objectives. An organisation must be able to serve clients frictionlessly enabling one-on-one relationships which are personalised and meaningful. Even a new entrant can disrupt the market by differentiating their offering, leveraging the transformative potential of the ‘digital’ stack.
Digital transformation is part of a larger process, and is the change associated with the application of ‘digital’ in all aspects of human society. Digital transformation is a mature phase of digital adaption where the knowledge and competence on digital start aiding the solving of real-world problems.
What are the phases of digital transformation that organisations must be conscious of?
Most people use the word digital transformation fairly loosely without an understanding of what it means. Digital transformation has three phases: digitalization, digitization and digital transformation. One may ask, ‘but aren’t these, the same?’ Though these terms are often used loosely and interchangeably in most articles and blogs, these are three distinguishable phases in the digital transformation journey.
DIGITISATION is the application of technology to digitise data to obtain more meaningful information to drive better outcomes for stakeholders.
DIGITALISATION is the process of driving technologically induced change within a given context, organisation, market, industry, etc. by which one could create a significant strategic lineage for oneself or a closed or open community.
DIGITAL TRANSFORMATION is the holistic approach to address business needs and problems by the application of digital to transform and change existing products or services, business models, socio-economic structures, legal and policy measures, organisational patterns, cultural barriers, etc.
Why should digital transformation be on the board and C-suite agenda?
The world is getting flatter due to the confluence of several factors not limited to the pervasiveness of digital identities, penetration of smartphones, maturity of cloud computing, loosely coupled systems and applications, greater privacy and security assurance, real-time access to data, advanced and predictive analytics capability, ability to provide location-based services, the ability to create value eco-systems on demand, etc.
The ability to connect any two dots in the digital world is your choice given that every business is faced with threats as well as opportunities that didn’t exist or were not significant enough to be focused on earlier. The NET economy fueled by growing availability of smartphones and devices; multiplying social platforms catering to different interests; cloud platforms which have removed strictures around capital investment on technology; Internet of Things (IoT) which is enabling businesses to connect the dots in terms of creating the data lake and finally big data and associated AI-based predictive modelling to better engage with stakeholders based on new business use-cases, new expectations, competitive positioning, multi-channel approaches, as well as new business models in primarily eliminating existing points of friction, unfulfilled demand and in creating better experiences.
The ability to connect any two dots in the digital world is your choice. the degree of separation between those two dots, for humans, is fast dropping from 6 degrees of separation to 3 degrees. The opportunity to connect any two dots is no longer about technology, rather it’s about why do you need to connect them? What value will it create? And how can they be connected to create sustainable value?
These are all business choices, but facilitated by digital and not purely a technology decision. Today, organisations have an extraordinary opportunity to deliver digitally abled products and services or to transforming what they do by using data and insights they gather to rapidly optimise their value chain to gain a competitive advantage.
It’s a fact that organisations leveraging digital creatively for its transformative potential have established themselves as leaders in their respective spheres
What should the board or C-suite do about making digital transformation a strategic priority for themselves?
It’s a fact that organisations leveraging digital creatively for its transformative potential have established themselves as leaders in their respective spheres. Often this is due to their transforming themselves to connect more closely with stakeholders, speed up innovation and, as a result, claim a greater share of profit in their industries. This will be important for any business to survive and only digitally enabled businesses will survive and thrive.
It’s an absolute imperative for members of the boards and C-suites to look closely at driving the following three agendas.
Accelerating change: The pace of digital change is rising exponentially, making it very difficult to maintain a position of industry leadership unless an organisation keeps up, and requiring an acceleration of new digital solutions to be brought to market.
Many of today’s boards and C-suites aren’t digital-savvy and as a result struggle to look at this from the right perspective
Digital competition: Companies are under increasing pressure to compete digitally, and long-established business models are being disrupted by “born digital” start-ups.
Customer expectations: Customers expect a good experience across all touchpoints; you must ensure their interactions are seamless and exceptional, and they have a choice.
In order to achieve this boards and C-suites must be able to drive strategies that embrace digital capabilities at the core of their corporate DNA.
According to a MIT Sloan Management Review article, there are 3 pillars and 9 building blocks for digital transformation:
Transform customer experience:
- Improve customer understanding with analytics – customer behaviour, segmentation
- Enhance top-line growth with digital products like smartphones, iPads, real-time predictive marketing
- Digitised customer touchpoints – social media analytics to answer complaints, self-service via apps, increased multi-channel usage.
Transform operational processes:
- Process digitisation with automation, adding new features
- Staff enablement with virtualisation of workspace working anytime, anywhere
- Performance management decision making based on data with deeper insights into customers, products, regions
Transform business models:
- Digitally modified businesses – augment physical with digital offerings, share content across an organisation
- Introduce new digital businesses – Nike introduced fuel bands
- Digital globalisation – use of global shared services to promote efficiency, from multi-national to global presence
What competencies and capabilities do the board and the C-suite team require to lead such a digital transformation?
Many of today’s boards and C-suites aren’t digital-savvy and as a result struggle to look at this from the right perspective. This comes from the legacy of leadership traits, experience, expertise as well as comfort zones in maintaining the status-quo. It’s critical to be able to have the entrepreneurial zeal as well as an innovation mindset and have peers on the board and C-suite who can bring in the digital dimension to spark that debate. I would say from a competency point of view with respect to digital the same logic holds good. Each board and C-suite must assess their awareness concerning digital competencies and capabilities for their respective organisation and they can easily use the well-established methodology to map themselves to charter a way forward.
- Unconscious state of incompetency in digital
- Conscious state of incompetency in digital
- Conscious state of competency in digital
- Unconscious state of competency in digital
What would constitute “competency in digital” would differ based on geography, industry as well as organisational maturity. But as a general guideline, I would recommend the following as must-haves,
- Digerati culture
- Digital quotient
- Entrepreneurial zeal
- Experimentation mindset
- Digital portfolio management
- STEMs & digital talent management
- Continuous drive for innovation
- Customer experience
- Cybersecurity and resilience
- Data and insights
- Digital employee empowerment
- Journey mapping
- Blue ocean strategy
- Design thinking
- Strategy canvass
- Business model innovation
- 3rd Platform technologies and their benefits
- Stay current and relevant with times
What’s required to bring about the necessary change at boards and C-suites?
It’s been the norm in the past to select financially savvy executives to boards and C-suites and this has for the greater part paid dividends. Today the technology disruption cycles are shorter than your average depreciation cycle. Today, remaining competitive is more about being agile and nimble than having a stronger balance sheet or P&L.
Leading for tomorrow will be very different to what we did yesterday or for that matter today. If we acknowledge this fact then we will start looking at the leadership talent and constitution of the board in assessing what we expect from our boards and C-suites to drive change.
The answer to this question will shed more light as to what needs to get done – be talent scouting, talent development, talent augmentation, talent acceleration, etc. There is no one-size-fits-all solution to this problem since each must figure their way out given their context. But it’s an absolute imperative that senior executives at board level as well as C-suites must be digitally savvy as much as them being financially savvy to be relevant for the future.
There is a dearth of digital leadership at most levels across organisations. How can boards and C-suites deal with this?
The dearth of digital leadership is universal. But there are no short answers given the exponential rise in demand for such talent. Ironically, the key mandate to address this very challenge remains with the boards and C-suites executives which forms the vicious circle. The only way out may be to look at creating that inertia through consultancy engagements with external organisations; crowdsourcing the requisite expertise; job rotation and leap-frogging.
What tools or approaches can a digitally savvy Chief Executive take to align a CXO team of finance, marketers, HR to a digitally transforming company?
To lead in the digital age, business leaders need to combine the best of human intelligence and machine intelligence to create an inclusive, tech-enabled and forward-thinking company. Further, turning digital opportunities into reality requires the right technology, the right competencies and the right people. It becomes then an absolute mandate for the CEO to align people, purpose and performance by means of identifying, coaching and developing the leading talent across the organisation to be able to digitally transform the company. This needs to cascade to every level of the organisation for it to become sustainable.
Leadership in the digital age must encourage a culture of measured innovation and experimentation within clear parameters, and they must learn fast. They must be able to quickly learn from their mistakes and course correct – fail safe. Fail fast.